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Global equity markets ended mostly firmer last week. UK markets ended the week in positive territory, buoyed by gains in mining sector stocks and amid upbeat corporate earning reports. On the data front, UK’s construction PMI advanced more than investor expectations in April, reaching its highest level in five months. In contrast, the nation’s services PMI recorded a less-than-anticipated rise in April. Further, Markit manufacturing PMI fell to a seventeen-month low in the same month. European markets ended the week on a positive footing, boosted by gains in technology sector stocks. On the macro front, Eurozone’s unemployment rate remained unchanged in March, marking its lowest level since December 2008. Further, 1Q18 gross domestic product (GDP) expanded at its slowest pace since the third quarter of 2016 on a quarterly basis. Moreover, consumer price index (CPI) climbed less than market expectations on an annual basis in April. Separately, Germany’s annual CPI rose at a faster-than-expected pace on an annual basis in April. US markets ended the week in the red, amid uncertainty over US-China trade talks and amid dismal earning reports. Data indicated that the US ISM manufacturing index fell to a nine-month low in April. Moreover, non-farm payrolls climbed less than anticipated in the same month. The nation’s trade deficit narrowed sharply in March, reaching its lowest level since September. Further, unemployment rate slid to a seventeen and a half year low in April. Meanwhile, Asian markets ended mixed last week.

 
     

Currency Update

 

The EUR ended lower against the USD, after the Eurozone’s CPI rose less than market expectations on an annual basis in April.
The British Pound ended weaker against the greenback, after the UK’s manufacturing PMI declined to a seventeen-month low in April.
The US Dollar ended stronger against its major counterparts last week, after the US trade deficit narrowed sharply in March, reaching its lowest level since September.

 
 

 

Fed keeps key interest rate unchanged, acknowledges increase in inflation

 

The US Federal Reserve (Fed), at its May monetary policy meeting, unanimously decided to keep the benchmark interest rate steady at a target range of 1.50% to 1.75%, meeting market expectations. Further, the central bank expressed more confidence in its inflation outlook, stating that annual inflation is expected to reach near the central bank’s 2.0% target over the medium term.

 
 

 

The Week Ahead

 

Ahead this week, investors will keep a tab on the Bank of England’s interest rate decision along with Japan and China’s trade balance figures for further direction. Additionally, the US consumer credit, JOLTS job openings, monthly budget statement and CPI figures, along with UK’s trade balance, manufacturing production and NIESR GDP estimate for three months ended April will attract significant investor attention.

 
 

 
 

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